Sequence of Bankruptcy Cases and Events

Chapter 11 Timelines 

Known as traditional, prearranged, and prepackaged, chapter 11 case types are legal constructs case professionals utilize to help a company restructure during a bankruptcy case.  In essence, they are defined as:

  • Traditional Chapter 11: The traditional chapter 11 case in which the company prepares for and enters into bankruptcy without a consensus among institutional creditors.
  • Liquidating Chapter 11: The traditional chapter 11 case in which the company prepares for and enters into bankruptcy without a concensus among institutial creditors.  The company either enters into bankruptcy knowing that all assets must be sold or during the course of the bankruptcy case must sell all assets because it is unabe to continue to operate due to lack of funds.
  • Prearranged Chapter 11: A hybrid between prepackaged and a traditional chapter 11 case.  The prearranged case completely prepares  for pre-bankruptcy solicitation, but doesn't actually execute until after the bankruptcy case is filed
  • Prepackaged Chapter 11: Institutional or substantial company creditors agree to significant debt restructuring in which debt is exchanged for equity and majority of creditors in interest are paid in full.  The prepackaged chapter 11 seeks approval of the plan of reorganization before the case is filed.  This allows a company in many instances to either forego or shorten certain chapter 11 compliance issues which saves money and time.  

 


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